Mr. Speaker, your committee would like to report on its consideration of Bill 65, Builders' Lien Act.
Bill 65 received second reading in the Legislative Assembly on November 3rd, 2022, and was referred to the Standing Committee on Social Development for review. On January 18th, 2023, the standing committee held a public hearing with the Minister of Justice. At the public hearing, the Minister made a commitment to conduct further engagement with the public. Following this, committee sought an extension of the review period under Rule 8.3(2). Over the next several months, committee engaged extensively with the department to consider several potential amendments. Committee acknowledges significant progress was made but could not agree on a path forward on several key areas of this bill.
Mr. Speaker, on June 29th, 2023, committee held a clause by clause with the Minister at which time committee passed a motion to report the bill as not ready to proceed. Thank you, Mr. Speaker.
Thank you, Member for Kam Lake. Reports of committees on the review of bills. Member for Deh Cho.
Question has been called. All those in favour? All those opposed? Any abstentions? The motion is carried. The committee report is deemed read.
Bill 65: Builders’ Lien Act (Bill 65) received second reading on November 3, 2022 and was referred to the Standing Committee on Social Development (Committee) for review. The Department of Justice (Department) sponsored the Bill.
On January 18, 2023, Committee held a public hearing on Bill 65. Committee heard comments focused on why the Builders’ Lien Act, as drafted, does not apply to the Government of the Northwest Territories (GNWT), but does apply to municipalities, and does not consider Indigenous governments at all. There were also questions on how provisions related to lands owned by those entities would work, particularly the provisions on seizure and sale. Committee had previously raised similar concerns, particularly concerning types of lands subject to the Bill and the extent to which GNWT engaged with Indigenous and municipal governments in developing the Bill.
During the public hearing, Committee expressed concerns regarding the lack of consultation done on behalf of the Department prior to Bill 65’s introduction. In response, the Minister of Justice made a commitment to Committee to conduct further engagement with the public. Following the public hearing, the Government House Leader formally requested that Committee seek an extension of the review period under Rule 8.3(2). The Department needed further time to engage in discussions with Indigenous governments, municipalities, and industry about Committee’s concerns. Committee agreed and successfully sought an extension.
Over the course of reviewing the Bill, Committee considered several potential amendments and engaged extensively with the Department on amending the Bill to better reflect concerns related to land interests and exemptions from seizure and sale. Six months were dedicated to Committee and Departmental staff working together and negotiating on potential amendments. However, while Committee acknowledges that significant progress was made, in the end, the Minister did not agree with Committee on a path forward on several key areas of the Bill. Committee therefore decided that the Bill as drafted is not ready to proceed. Committee decided it was better to urge the Department to work to improve the Bill and reintroduce it in the next Assembly with significant modifications to improve it, rather than to proceed with a fundamentally flawed Bill at this time.
Committee strongly supports the need for new builders’ lien legislation in the Northwest Territories. The existing Mechanics Lien Act has not changed substantially for decades. Since then, real property development, contractual arrangements and construction practices have changed considerably and continue to evolve. The central intent of such legislation is to ensure that contractors, subcontractors, and workers are paid for their work and materials. In recent years, other Canadian jurisdictions have updated their builders’ lien legislation, such as Ontario (2019), British Columbia (2020), and Alberta (2022).
However, Committee has concluded that Bill 65, as it is currently written, is not ready for passage in the Legislative Assembly. Committee believes the Department needs to approach this legislation differently and author a new Builders’ Lien Act within the first half of the 20th Assembly as a significant priority.
Committee sought public feedback on Bill 65 with a public notice and targeted engagement letters. Committee received written submissions from:
Mr. Dale Johnson of Clark Builders; and
Yellowknives Dene First Nation (YKDFN)
All written submissions are included in an Appendix to this report.
Additionally, during the public hearing on Bill 65, Committee heard remarks from the Minister of Justice and asked questions to departmental officials. Committee thanks Mr. Johnson and YKDFN for their engagement. Their participation helped inform Committee discussions on key issues for future consideration.
There are three main areas that Committee had concerns with regarding Bill 65.
The primary issue was determining which land interests held by different levels of government and Indigenous governments would be subject to seizure and sale, as that is the the ultimate remedy for a lien that ensures a contractor or subcontractor is paid for their services.
Second, the core structure of the Bill being such that exemptions from seizure and sale are made on the basis of who owns a project, rather than what type of project it is.
Committee’s main concern with Bill 65 is how the Act would operate in regard to liens on construction projects within the context of several types of lands owned by multiple levels of government across the NWT. For example, of the lands to consider includes municipalities, lands withdrawn from disposition for the purpose of pending treaties, private land, and properties located within land, resources, and self-government agreement areas, among others. Given that within the NWT much land is either owned, or managed and administered by different levels of government, Committee considered it vital that the Act clearly state which types of lands may be subject to seizure and sale as a remedy for a lien on a project.
Ultimately, Committee did not want one level of government to be exempt from seizure and sale, while other levels of government would be subject to seizure and sale. From the start, it was Committee’s desire that all levels of government be treated the same under the Act. However, the Bill as drafted does not bind the GNWT, but it does bind municipalities, and it makes no reference to Indigenous governments. This latter point, of having no reference to Indigenous governments, was a major point of contention for Committee, as it provided the sense that the Bill had been drafted without the consideration of Indigenous governments.
Committee had many discussions on this subject, including with the Government House Leader. Committee struggled with the notion that if Indigenous governments would be subject to the Bill, and would have their lands exempted from seizure and sale just like the GNWT or a municipal government, then how would an Indigenous government be defined? Committee proposed several draft motions to amend this aspect of the Bill, and considered many draft motions proposed by the Department. As these discussions progressed though, Members quickly realized that this topic raised bigger questions about defining an Indigenous government that could not and should not be answered within the context of this Bill.
Committee determined that it is inappropriate for both the legislative branch, as well as the executive branch of government to prescribe a definition on what an Indigenous government is within the context of Builders’ Lien legislation. Especially while there is another Bill before the Assembly concerning the United Nations Declaration on the Rights of Indigenous Peoples, which is an internationally recognized document that affirms the autonomy and self-determination of Indigenous peoples. Article 3 of the Declaration, which reads:
“Indigenous peoples have the right to self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.”
With this consideration, Committee determined that the GNWT should not be the arbiter in defining what an Indigenous government is, as that is a matter that should be decided by Indigenous peoples and Indigenous governments themselves. Thus, Members concluded that while this is an important topic that is part of a larger discussion that should be had, it is not Committee’s place to legislate on this matter with this Bill.
Furthermore, Committee did consider several options as potential paths forward with this section of the Bill. Those included leaving the definition of Indigenous government undefined, identifying Indigenous governments through regulation, as well as utilizing the definition of Indigenous government from another Bill before the Assembly, which is Bill 85: United Nations Declaration on the Rights of Indigenous Peoples Implementation Act.
It was at this point where discussions broke down, as Committee did not consider this subject sufficiently addressed within the Bill as drafted. Thus, since a compromise could not be reached with the government on what specific language to use in the Act, Committee decided that Bill 65 is not ready to move forward.
Committee recognized that if Bill 65 was amended to bind the GNWT, along with municipalities and Indigenous governments, to be subject to liens but not to seizure and sale of land, then very little infrastructure in the NWT would be left to be subject to seizure and sale. Recognizing this, Committee determined that the Bill as drafted, which provides an exemption for seizure and sale on the basis of who owns a project, was problematic.
Therefore, following much consideration on this point, Committee determined that exemption for seizure and sale of land should instead apply to the type of project, rather than the owner of the project. Approaching the Bill this way would avoid the issue of having to define Indigenous governments altogether.
This approach to the Bill would ensure a better balance between protecting critical public infrastructure such as health centres, highways, or emergency services, etc., against the need to protect contractors, workers, and suppliers, which is the primary intent of the Bill. However, because this is such a substantial shift in how the Bill is structured, and since there is not enough time within the 19th Assembly to make this fundamental change to the Bill’s structure, Committee decided that the Bill should be re-drafted.
One aspect that was absent from Bill 65 is a section on prompt payment, which would provide assurances within a set timeline for contractors and subcontractors to issue invoices for their work, and for owners to pay invoices for services rendered. A prompt payment system would also create a dispute resolution mechanism by providing a framework for resolving disputes between parties. Committee is aware of several jurisdictions that have codified prompt payment systems into legislation, with the most recent jurisdictions whose amendments and regulations came into force being Alberta (2022), Saskatchewan (2022), and Ontario (2019).
Committee did ask the Government House Leader if this system was considered, and the response was that the Department made a conscious choice not to include this provision at this time. However, the government indicated that it is open to adding this provision in the future. The government also considered adjudication provisions, but chose not include it in the Bill, as the government considers the issue of payment schedules as a matter for the Supreme Court, under debtor/creditor law.
Committee heard prompt payment as a vital concern of the construction industry. Therefore, Committee considered the absence of a prompt payment system as a significant missing aspect within Bill 65 and Committee would like to see the inclusion of such a provision within future lien legislation introduced by the government.
On June 29, 2023, Committee held a clause-by-clause review. Committee passed a motion to report Bill 65 to the Legislative Assembly as not ready for consideration in Committee of the Whole.
Committee strongly recommends the Department to work on re-introducing Builders’ Lien legislation that addresses the fundamental flaws with Bill 65 as a top priority for the next Assembly.
This Concludes The Standing Committee On Social Development’s Review Of Bill 65: Builders’ Lien Act.
